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Should Vanguard Mid-Cap ETF (VO) Be on Your Investing Radar?
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Launched on 01/26/2004, the Vanguard Mid-Cap ETF (VO - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Mid Cap Blend segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $56.49 billion, making it one of the largest ETFs attempting to match the Mid Cap Blend segment of the US equity market.
Why Mid Cap Blend
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. Thus they have a nice balance of growth potential and stability.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.04%, making it the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.53%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 17.10% of the portfolio. Industrials and Financials round out the top three.
Looking at individual holdings, Cadence Design Systems Inc. (CDNS - Free Report) accounts for about 0.86% of total assets, followed by Amphenol Corp. (APH - Free Report) and Corteva Inc. (CTVA - Free Report) .
The top 10 holdings account for about 5.13% of total assets under management.
Performance and Risk
VO seeks to match the performance of the CRSP US Mid Cap Index before fees and expenses. The CRSP US Mid Cap Index targets inclusion of the U.S. companies that fall between the top 70%-85% of investable market capitalization.
The ETF has added about 12.75% so far this year and is up roughly 13.02% in the last one year (as of 07/20/2023). In the past 52-week period, it has traded between $186.57 and $228.23.
The ETF has a beta of 1.08 and standard deviation of 19.47% for the trailing three-year period, making it a medium risk choice in the space. With about 349 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Mid-Cap ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VO is an outstanding option for investors seeking exposure to the Style Box - Mid Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell Mid-Cap ETF (IWR - Free Report) and the iShares Core S&P Mid-Cap ETF (IJH - Free Report) track a similar index. While iShares Russell Mid-Cap ETF has $29.79 billion in assets, iShares Core S&P Mid-Cap ETF has $72.29 billion. IWR has an expense ratio of 0.18% and IJH charges 0.05%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.
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Should Vanguard Mid-Cap ETF (VO) Be on Your Investing Radar?
Launched on 01/26/2004, the Vanguard Mid-Cap ETF (VO - Free Report) is a passively managed exchange traded fund designed to provide a broad exposure to the Mid Cap Blend segment of the US equity market.
The fund is sponsored by Vanguard. It has amassed assets over $56.49 billion, making it one of the largest ETFs attempting to match the Mid Cap Blend segment of the US equity market.
Why Mid Cap Blend
With market capitalization between $2 billion and $10 billion, mid cap companies usually contain higher growth prospects than large cap companies, and are considered less risky than their small cap counterparts. Thus they have a nice balance of growth potential and stability.
Blend ETFs usually hold a mix of growth and value stocks as well as stocks that exhibit both value and growth characteristics.
Costs
Expense ratios are an important factor in the return of an ETF and in the long term, cheaper funds can significantly outperform their more expensive counterparts, other things remaining the same.
Annual operating expenses for this ETF are 0.04%, making it the least expensive products in the space.
It has a 12-month trailing dividend yield of 1.53%.
Sector Exposure and Top Holdings
It is important to delve into an ETF's holdings before investing despite the many upsides to these kinds of funds like diversified exposure, which minimizes single stock risk. And, most ETFs are very transparent products that disclose their holdings on a daily basis.
This ETF has heaviest allocation to the Information Technology sector--about 17.10% of the portfolio. Industrials and Financials round out the top three.
Looking at individual holdings, Cadence Design Systems Inc. (CDNS - Free Report) accounts for about 0.86% of total assets, followed by Amphenol Corp. (APH - Free Report) and Corteva Inc. (CTVA - Free Report) .
The top 10 holdings account for about 5.13% of total assets under management.
Performance and Risk
VO seeks to match the performance of the CRSP US Mid Cap Index before fees and expenses. The CRSP US Mid Cap Index targets inclusion of the U.S. companies that fall between the top 70%-85% of investable market capitalization.
The ETF has added about 12.75% so far this year and is up roughly 13.02% in the last one year (as of 07/20/2023). In the past 52-week period, it has traded between $186.57 and $228.23.
The ETF has a beta of 1.08 and standard deviation of 19.47% for the trailing three-year period, making it a medium risk choice in the space. With about 349 holdings, it effectively diversifies company-specific risk.
Alternatives
Vanguard Mid-Cap ETF holds a Zacks ETF Rank of 1 (Strong Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, VO is an outstanding option for investors seeking exposure to the Style Box - Mid Cap Blend segment of the market. There are other additional ETFs in the space that investors could consider as well.
The iShares Russell Mid-Cap ETF (IWR - Free Report) and the iShares Core S&P Mid-Cap ETF (IJH - Free Report) track a similar index. While iShares Russell Mid-Cap ETF has $29.79 billion in assets, iShares Core S&P Mid-Cap ETF has $72.29 billion. IWR has an expense ratio of 0.18% and IJH charges 0.05%.
Bottom-Line
While an excellent vehicle for long term investors, passively managed ETFs are a popular choice among institutional and retail investors due to their low costs, transparency, flexibility, and tax efficiency.
To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.